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Daily Analysis – Stocks Tumble on ECB Disappointment

ByBinary Options Strategy
Published 12/09/2011, 06:02 AM
Updated 05/14/2017, 06:45 AM
NDX
0.12%
DE40
0.48%
JP225
0.47%
HK50
2.64%
FLG
0.00%
SMT
-3.40%
Equities

Asian markets slid on Thursday as anxiety grew ahead of Friday’s European Summit. The Nikkei dropped .7% to 8645, pulling back from a 1-month high. The Kospi slipped .4% after the Bank of Korea held interest rates at 3.25%, and Australia’s ASX 200 declined .3%. China’s Shanghai Composite largely recovered from an earlier drop, closing down .1%, and the Hang Seng shed .7%.

European markets tumbled after ECB President Mario Draghi said the region’s economy faced significant risks, while offering no new bond purchase plan. The central bank cut interest rates to 1% from 1.25%. The CAC40 dropped 2.5%, the DAX lost 2%, and the FTSE fell 1.1%, with financials leading the declines. The European Banking Index closed down 3.1%.

US stocks posted similar losses. The Dow fell 199 points to 11998, the S&P 500 skidded 2.1%, and the Nasdaq lost 2%. Selling accelerated in the last few minutes of the day after Germany rejected a draft proposal for the EU summit, casting doubts on the outcome of Friday’s meeting. The ongoing debate over whether to introduce stiffer budgetary requirements, or strengthen the bailout mechanisms, does not appear close to resolution.

S&P 500 Index

S&P 500 Falls 2.1%

Despite earnings reports which exceeded estimates, Costco fell 2% and Smithfield Foods dropped 3.7%.

Currencies

The currency markets shunned risk on Thursday, pressuring the Australian and Canadian Dollar. The Australian Dollar fell 1.2% to 1.0168, and the Canadian Dollar dropped 1.3% to 1.0218. The Pound and Euro both lost .5% to 1.3348 and 1.5638 respectively, while the Yen closed flat at 77.67.

Economic Outlook

Weekly jobless claims were far better than expected, dropping by 23K to 381K. Wholesale inventories rose by 1.6%, more than forecast, posting their biggest gain in 5 months.

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